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An empirical analysis of the impact of trade credit on bank debt restructuring

  • Antonio Fabio Forgione
  • Carlo Migliardo
Article

Abstract

This paper analyzes the relationship between the likelihood that Italian firms implement bank debt restructuring and the trade credit. It uses a sample of 2377 Italian firms over the period of 2010–2014. The empirical analysis shows that the amount of payables and the unexpected delay in the payment of trade credit are strictly related to the firm’s financial distress. Specifically, the findings suggest that companies in financial distress have used trade credit extensively and suffer from the deferment of receivables. This result supports the hypothesis of a potential credit contagion channel in the supply chain with a cascading effect between buyers and suppliers.

Keywords

Bank lending Corporate distress Panel logit model Trade credit 

JEL Classification

G21 G33 C23 C53 D92 

Notes

Acknowledgements

The authors are grateful to the research department team of Bank of Italy for their support in the various remote elaborations. The authors thank two anonymous referees for their critical comments and suggestions. The usual disclaimer applies. Both authors contributed equally to each section of the article.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MessinaMessinaItaly

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